Kenya’s slowing tourism industry could further contract this year as a terrorist attack in the Westgate shopping mall, which is located in the country’s capital city Nairobi, could cause international visitors to question the safety of the country. Kenya’s stock market declined by 0.5% in late September, as a four-day attack on one of Nairobi’s largest shopping centres resulted in the death of 67 people, with a further 39 people still reported as missing.

The attack, which was the worst of its kind in the country since al-Qaeda bombed the US embassy in Nairobi in 1998, could significantly dent Kenya’s international reputation as a safe and tourist-friendly destination. Analysts expect that the size of the tourism industry could contract by the end of 2013.


“The attack will end up being most costly for the tourism sector, which is the country’s second largest contributor to foreign exchange after agriculture, contributing $1.3bn to national revenues in 2012,” Clare Allenson, an associate at the political risk research and consulting firm Eurasia Group, told the Financial Times.

FDI into the country’s hotels and tourism industry has been declining in recent years, and the attack on the Westgate shopping mall could affect the industry’s near-term prospects for growth. According to official government reports, three UK, two French nationals and two Canadians were among those killed during the siege, and Charles Robertson, the global chief economist at Renaissance Capital, estimated in an online statement that the violent attack could reduce tourism revenues by $160m this year.

The terrorist attack has been the latest in a series of events that have dented Kenya’s international image as a safe and stable country. At the beginning of August, Jomo Kenyatta International Airport, which is Kenya’s main international airport and the largest in air hub in east Africa, was closed due to a fire that destroyed the international terminals. Serving as the main gateway for European tourists entering Kenya, as well as those heading to neighbouring countries, the fire led to the temporary closure of the airport during the height of the tourist season. Mr Robertson estimated that the decline in tourism revenues could lead Kenya’s GDP to contract from 5.6% to 5% by the end of 2013.